(Sep 12): Apple made a big bet last year that it could convince you to spend $1,000 or more on a new iPhone. It sounded like a crazy move after people spent 10 years spending $650 or so on a new device, but Apple's gamble worked.
The iPhone X, which starts at $999 and goes all the way up to $1,149, has helped boost profits for the company, even as iPhone unit sales continue to flatten. Last quarter, the pricier iPhone X helped increase the iPhone's average selling price (ASP) to $724, which was well above expectations.
It turns out Apple doesn't necessarily need to sell more phones each year to keep its wild profits flowing. It just needs to create a version that's worth spending more on.
But things are going to change this year.
According to numerous reports, Apple will announce three new iPhones based on the iPhone X design on Wednesday. That means we've seen the last of new iPhone models with a home button and large, chunky borders around the screen, like last year's iPhone 8. Starting this week, all iPhones will look like the iPhone X for the foreseeable future.
It also means Apple will probbly tweak its pricing scheme to reflect the fact that paying a premium for a futuristic phone no longer makes sense.
According to a June report obtained by MacRumors and written by Ming-Chi Kuo, an analyst at TF International Securities who is almost always accurate with his Apple gadget predictions, the successor to the iPhone X will start between $800 and $900 instead of $1,000. There will also be a larger version of the phone, the so-called iPhone Xs Max, that will start between $900 and $1,000. And the new entry-level model with a cheaper, 6.1-inch LCD screen, will cost between $600 and $700.
If Kuo's pricing predictions hold up, that gives Apple the opportunity to keep growing iPhone profits through the $1,000 jumbo-sized iPhone X model, while growing overall unit sales through the two cheaper models. A discounted new version of the iPhone X will seem like a steal at $900, compared to its current price. And the LCD model will look especially enticing at $700.
While the gamble last time was that customers would pay more for the X, this time Apple is betting that higher volumes and still-strong margins on the cheaper phones will make up for any decrease in average selling price. Apple's last gamble paid off, despite skepticism from analysts. This time, everybody will be watching the December earnings report closely to see if the company can pull off another record run.